Tides says it will delay capital calls – but gives no details on how

"This has been like a driving on a fast-moving freeway, that suddenly narrows to just one lane,” syndicator says in latest investor letter

Tides Delays Capital Calls In Anticipation of New Funding — Tides Equities' Ryan Andrade and Sean Kia (Tides Equities, Getty)

Aug 4, 2023, 4:20 PM

Tides Equities, which said in late June that a capital call was imminent, rolled back that warning in a much rosier update last week.

The multifamily investment firm touted “a lot of success in the past month working with lenders, equity partners and our new property managers,” co-founders Ryan Andrade and Sean Kia wrote in a late July letter obtained by The Real Deal.

“For our part, we have felt it prudent to hold off on calling our Tides investors for capital,” the founders said. The company will evaluate how workouts, preferred equity infusions and funds from majority backer AMC Investments might support deals.

Kia confirmed the veracity of the letter to TRD, and said he would “pursue every possible scenario” before a capital call.

What the firm did not disclose in the letter was whether it had actually secured any of those lifelines. The company did not name a single source of new capital scored or note any specific loans that were modified.

In the letter, Andrade said he and Kia had flown to New York to meet with lenders to discuss loan workouts. A number of Tides loans have been watchlisted after rising debt service payments ate away at net cash flows.

The firm did not say it had modified any loans, only that the “in-person connection … has enabled us to drive forward loan modifications that are quite accretive to investors.”

Tides also did not directly address whether it had scored additional preferred equity, a hot-button issue after its new property manager, RPM Living, pulled out of a potential commitment in June.

Last week, TRD reported on a June 20th letter from AMC to Tides investors noted RPM would invest $12 million into some properties. The same day, RPM COO Josh Kahn said it was not kicking in that capital.

The June 20 letter detailed that AMC would provide $1 million in short term funds and invest $325,000 in preferred equity through one of its investment vehicles to supplement that infusion. It’s unclear if that commitment is still on the table. James Hopper, president of AMC, did not respond to a request for comment.

Tides, in its late July update, said rising rates and falling property values had “brought all parties to the table on most deals to work on a holistic solution to resetting the clock via various loan modifications and preferred equity injections.”

Meaning, preferred equity is coming. But from whom or when is still under wraps.

“I will wait until all is finalized before sharing any details of course,” Andrade wrote.

Kia told TRD last week it had secured “a bucket of capital from a few high-net-worth individuals” but declined to identify the individuals or which deals their money would go toward.

Tides noted in its letter that it has grown its team, “contrary to many other operators, who tend to cut costs during this phase in a cycle.” The extra manpower, Andrade said, allowed asset and construction managers to visit sites nearly twice as often as before, and for the firm to “level up our data and analytics.”

A loan update shared with TRD showed the firm fell behind on debt payments on a Las Vegas property in July.

The $34 million loan backed by Tides on North Paradise was marked less than 30 days delinquent, according to a Trepp update. The property had previously been watchlisted for rising vacancies and crippled cash flow.

In response, Kia told TRD that “we are current on all of our mortgage payments on every asset in our portfolio.”

MF1 Capital, one of Tides’ biggest lenders, holds that debt.

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